Telenor and SocGen Buy KBC's Serb Bank Assets to Expand

Norwegian phone company Telenor ASA (TEL) and French bank Societe Generale SA (GLE) will expand in Serbia by acquiring the equity and assets of KBC Groep NV (KBC)’s subsidiary in the former Yugoslav republic.

Telenor’s Serbian unit will take over all of KBC Banka AD’s equity as it seeks to start a mobile banking business in Serbia, while Societe Generale’s subsidiary is taking over 81,000 private clients and a portfolio of 209 million euros ($271.8 million) in loans and 142 million euros in deposits, the two companies said in e-mailed statements in Belgrade today.

Serbia, which is working to start formal talks this year to join the European Union, is trying to lure new cash to the Balkan nation and persuade long-time investors that the nation is stamping down on political instability.

“This acquisition only confirms our commitment to further development and Serbia’s economic growth, as well as our contribution to the stability of the banking sector in Serbia,” SocGen’s Serbian Chief Executive Officer Frederic Coin said in the statement.

KBC’s shares were down 0.7 percent at 29.685 euros by 1:17 p.m. in Brussels, while Telenor’s shares fell 2 percent to 127.9 krone in Oslo and SocGen was trading at 26.615 euros, 1.3 percent lower from the previous day in Paris, according to data compiled by Bloomberg.

The transaction is expected to reduce KBC’s earnings by an estimated 47 million euros, including 17 million euros in the first quarter of 2013.

Global Expansion

Telenor, the world’s sixth-largest mobile operator, is pursuing a global expansion to the banking business with a worldwide revenue target of $1 billion through 2016.

The acquisition was the “fastest way to enter the market,” the company said in a statement, citing Ove Fredheim, the head of Telenor’s Serbian unit. The transaction in Serbia needs approval from the central bank and the competition watchdog.

Telenor’s local revenue rose 7.8 percent to 10.06 billion dinars ($117 million) in the first half of 2013, it said.

KBC Banka accumulated a 2.24 billion-dinar loss in 2012. Its assets stood at 29 billion dinars and capital was worth 3.4 billion dinars, according its 2012 financial report published by the National Bank of Serbia.

Taking over KBC’s clients will not affect the ranking of the French bank and it will remain the fourth-biggest lender in Serbia by assets, central bank figures show. SocGen’s assets in Serbia stood at 202.9 billion dinars at the end of 2012 and the bank had a pretax profit of 116 million dinars.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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